Matt Simmons Says Gulf Clean Up Will Cost Over $1 Trillion, Sees BP At $1, Says "We Have Now Killed The GoM"

Matt Simmons shares some startling revelations in his latest Bloomberg TV interview, in which he says none of the propaganda matters on TV 24/7 (photoshopped or not) as the ultimate clean up cost will likely be well over $1 trillion, and a result he is unconcerned about his BP short. He ultimately see the stock going down to $1. What Simmons alleges however is far more startling and audacious: that this is a joint cover up effort between the administration and BP, in which both entities keep throwing sand in the eyes of observers while distracting everyone from the matter at hand: "What we don’t know anything about is the open hole which is caused by
the drill bit when it tossed the blow-out preventer way out of the
hole…and 120,000/day minimum of toxic poison has now covered the floor of
the Gulf of Mexico. So what they’re talking about is the biggest
environmental cover-up ever. And they knew that that well, that riser,
would finally deplete. And then they could say it’s over." On blaming the catastrophe on Transocean: "For two days they kept saying it’s a rig fire. When the rig sank they
could no longer call it a rig fire. It’s a riser leak…Because if they
said the truth they would all go to jail." The conclusion: "Unfortunately, we now have killed the Gulf of Mexico."

On whether the well pressure should be a concern:

“No, it’s a total diversion - that’s the gas condensation that was trapped in the drilling riser which blew off the wellhead at 10:01 PM CT on April 20th, it's a mile-long compressed natural gas."

"What we don’t know anything about is the open hole which is caused by the drill bit when it tossed the blow-out preventer way out of the hole…and 120,000 minimum of toxic poison has now covered the floor of the Gulf of Mexico. So what they’re talking about is the biggest environmental cover-up ever. And they knew that that well, that riser, would finally deplete. And then they could say it’s over. And unfortunately, we now have killed the Gulf of Mexico.”

“Some 5-10 miles away is what the NOIA research vessels have now proved is a deep oil lake that is growing by the day and it’s very toxic oil and its gases are very lethal. Basically if we have a hurricane now, we would have to evacuate the Gulf Coast.”

On the financial implications for BP:“When people find out the magnitude of the story, I don’t know if we can technically clean up the Gulf but it would cost at least a trillion dollars.”

Simmons on his reaction to the rig explosion:

“First of all when I woke up, when my wife turned on the television at 7:00 AM on the 21st and I saw this shocking news, that one of the greatest deepwater rigs ever built by one of the great companies in the industry, Transocean, was in the middle of this terrible fire, and then they said this was a rig fire, this is fuel on the rig, I know that there was 700 gallons of diesel on the rig, I said ‘This is a lie, the Gulf of Mexico is on fire. Why are they saying this?’ For two days they kept saying it’s a rig fire. When the rig sank they could no longer call it a rig fire. It’s a riser leak…Because if they said the truth they would all go to jail.”

On whether the blame lies squarely with BP:

"I think Transocean need Congressional Medals of Hero for this…I am really disgusted. Other than John Hofmeister, the retired president of Shell America, he's the only other person in the industry who I've seen to speak out."

Simmons on why he is shorting BP stock:

“You bet I did. Because I thought BP was going to go under. I’ve been saying that for months and months and when I read that 20 of the 24 Wall Street analysts had a ‘buys,’ I said ‘ That’s ridiculous, I’m going to short them.’ I’ve never shorted a stock in my life before.

"I have patience. The stock will go to one."

“They promised to clean up the Gulf, is that right? Do you know how much it will cost if they can technically do it? Well over a trillion dollars.”

On whether there is hope for a permanent solution now that the oil has stopped leaking:

“No, because that’s not the gusher. That was a little bit of condensation that would have ended anyways. There’s no way to fix the gusher because there’s no casing left in the hole other than doing a small diameter nuclear bomb…It's the only way. With no casing left in the hole, the odds of the relief well working are zero. What the relief wells do-- if they can find the casing, they then cut a 4 inch hole--and then they have something to capture the mud with. With no casing there, it's like pouring oatmeal down a fire hydrant…The casing is not there. It's scattered over the ocean floor. The government now has gamma ray images of the actual blow-out preventer, which is five stories high, weighs 325 tons and it has two sections of casing that pierced through five stories of metal."

Junkers late to the party or what? I'm saying that we shouldn't junk over 19 so we can see the comment and maintain thread integrity since Tyler doesn't allow infinite junks. It would be cool to see 56 junks, or whatever. Instead, POOF!

If they had already tripped the pipe and had run casing for that section of the well and were cementing at the time of the blow out, then why would there be a drill bit (drill bits are attached to drill pipe not casing) in the well that supposedly destroyed the BOPs shear rams on the way out?

Secondly, how could presure build up from condnesate, which is a stable mineral at those pressures, inside a riser which is torn to shreds? If any of the condensate turned to gas it would simply bubble to the surface. Remeber the gas was turning to condensate when it hit the sea water and cooled, clogging the top hats.

The riser is what carries the drilling fluid and cuttings to the surface from the TOP of the well bore and was certainly not 6 inches, try more like 20 or 30 something for a well that deep. A well is drilled in several sections each with a progressively smaller diameter (think telescope). After a section is drilled the pipe must be tripped (taken out of the hole) and casing run down the hole, then cemented before the next section can be drilled or before production completion can be performed. It was during one of the cement jobs at depth when the had a blow out (cement didn't set properly, time or composition could have been factors).

the hole is filled with mud. They trip the drill pipe out of the hole to run the casing. Casing is open on the bottom and fills with the mud, surrounded by the mud. Pump the cement job down the inside of the casing, through the shoe / hole in the bottom, up the back side of the casing. Wait on Cement, Test Cement. Now they run the drill pipe back into the hole to the point where they want to start the seawater displacement. they pump the seawater beginning at 8,000 ft, 3000 ft below mudline. When the seawater goes in, the mud comes out of the casing from that point up to the top. Displacing the mud lowers the weight and the well blows. There is still the drill string in the casing, through the riser, BOP and wellhead, when the well blows and the BOP is shut. Drill pipe is in about 30' sections that are screwed together. those joining points are thicker to compensate for the threads and the weakness they may cause. It could be that there was a thicker coupling in the BOP. Or it could be that there was some casing moved up the hole a few feet that is also in the BOP.

@Noah: Well, I think "full of shit" is a bit overdone. He said from day one that this was a major leak, when BP and the Coast Guard were saying it was only 1,000 barrels and day, then only 5,000 barrels a day. He was right, they were not giving accurate information.

Simmons said that the casing was ejected up the bore hole. BP said that was impossible. Then gamma ray imaging done at the insistence of the US Government showed a section of casing that had been ejected. He was right, BP was not giving accurate information.

Maybe he is wrong about the particulars or the magnitude of this supposed "oil lake" and I hope he is. But his track record is better than BP's so far.

So there ain't no oil on your beach, Archie?? I guess that means there was no disaster either? Problem solved <dusts hands>.

But just in case we weren't all imagining startling footage of pelicans suffocating under a viscous coat of Quaker State, can you tell us exactly what did happen? Think millions of gallons of Correxit sprayed liberally into the gusher may have done something to conceal the true nature of this disaster, er, small environmental hiccup? Kinda like Vietnam was just a police action.

denari, you are exactly right. Plus, they have captured most of the leaked oil. But, as you can see, there are a lot oil haters out there who WANT to believe that this is a catastrophe when it isn't. I've run an estimate and based on what they've spent so far, this will not cost BP more than $20 billion and probably more like $15.

I was reading the comments on the dollar estimates and was wondering how much oil are we talking about. While I can't comment on the dollars, it was helpful for me to get an idea of how much oil we were talking about so here it goes (I did the computations in Word and Excel so I'm not sure why the weird coding langauge before my numbers):

NY Times on June 10th had experts estimating 25k-30k of oil spewing a day.I haven’t followed closely so I’ll use the June 10th figure to see how much has spilled.Blast happened on April 20th.That’s 50 days between the two dates.From the experts estimates that’s anywhere between 1.25 million to 1.5 million barrels.According to EIA.gov there’s 42 gallons of oil in a barrel. We all know what a gallon of milk looks like. So that’s anywhere from 52.5 million to 63million gallons of oil according to experts or 1.26 million gallons a day.And I’m sure my June 10th date is inaccurate. According to the EPA and Encyclopedia Britannica there are 643 quadrillion gallons of water in the Gulf. This oil by my lowballed estimates is 000000008% of the Gulf's total volume. Now is that over $20 billion dollars worth of damages. I have no idea, but shit...that's a lot of gallons of oil. But then again the Gulf is a lot more of gallons of water.

heh, I went looking for oil over a dozen times and not once did I find a single glob. I heard that a little came ashore one night, but they got to it by early morning. So, yes, the sugar sand remains unsullied. Pensacola and Orange Beach had some come ashore, but nothing that was not easily scooped up. The worst part of this whole thing is what the stinking media did to us by blowing this out of proportion and scaring everyone away. Those that do come here say "Where the hell's the oil?"

Well Noah's gonna get junked again but I wanted to bring everyone's attention to this quote from him:

heh, I went looking for oil over a dozen times and not once did I find a single glob. I heard that a little came ashore one night, but they got to it by early morning. So, yes, the sugar sand remains unsullied. Pensacola and Orange Beach had some come ashore, but nothing that was not easily scooped up. The worst part of this whole thing is what the stinking media did to us by blowing this out of proportion and scaring everyone away. Those that do come here say "Where the hell's the oil?"

Noah. I live in Florida. East Coast now, West Coast for 8 years prior. Say, you live in Florida too? Hmm. You know, if this spill actually IS bad, that might hurt business and the local economy, right?

What I'm saying is that it appears that you have a conflict of interest here. Capiche?

Totally agree. What's washing up on the Destin beaches in July of 2010, frankly, doesn't mean shit. The true ecological impact will take years to understand. Those dispersants they are using to keep the oil buried in the Gulf don't seem kosher to me. BP's strategy is out of sight, out of mind, at least until they can wash their hands of this fiasco and leave it to someone else to clean up.

Guys, at some point "swine flu" was a BFD, too, so were Volcanos holding up air traffic. Can't we just all be rational and read the technical discussions on The Oil Drum? They don't even mention Simmons b/c his ideas are, for the most part, way, way WRONG.

Why ZH posts these shock stories, geez..What next, the drunk lady who claims BP insiders told her everything, and then was seen obviously drunk talking about tsunamis killing everyone on the Gulf.

I think it's too early to tell whether this will be a "mega catastrophe", or not. It is bad, no doubt. The fact that this shit spilled into the gulf at this rate.....is bad. There is no way around that.

However, we don't know if it is going to dissipate and have minimal impact...or, if a hurricane will pick this shit up and spray it all over your lawn and house.

"Yet 20 times as much oil from this one has only shown up on 600 miles of coastline?"

It’s the plumes, Kendall said [renowned wildlife toxicologist]. The oil is suspended in mammoth globs below the surface, out of the reach of the best natural dispersant — the sun. The temperatures at those depths are basically preserving the giant globs “like a giant refrigerator.”

“I think (the plumes are) the beast that we’re going to have to deal with in the future,” he said, especially once more hurricanes and tropical storms stir them.

" (Simmons) was unceremoniously stripped of his Chairman Emeritus title at his own firm and namesake, Simmons & Company (who, in my view, is just a “dime a dozen” investment bank without the benefit of Mr. Simmons’ leadership and expertise). Can you imagine that?!?! Kicking your chairman out for having the gall to opine (aided by information from the aforementioned Rolodex of contacts) that BP might have been lying? I guess Simmons & Co. is desperate to whore to “lying Tony” for the holy grail, a placement in the syndicate for a potential multi-billion stock offering by BP to “save the company” once the lying is sufficiently mainstreamed. Just incredible." Andy Hoffman

No one credible is saying anything like what Simmons says. Plus, it would be foolish of the adminstration to cover up a disaster when they could blame it all on BP. Simmons has made wild claims about gases killing everyone on the Gulf coast. Do you believe that scientists wouldn't have brought that up if it were at all possible?

@Internet Tough Guy: I tend to agree and hope you are right, but then again I never would have expected BP to lie about the initial rate of the spill (which was easy to calculate when they released the images) for over a month. I really hope Mr. Simmons is the one who is inaccurate in this case.

Trust no one... No one knows how bad it is or for how long oil will wash up on the shores, but the clean up will take a long, very long time.

BP will fold in a few years under the cost of clean up and what not. But not before its most valuable assets are sold for peanuts to a few, smaller companies that will then merge into NewBP with headquarters somewhere else. That's how it usually works...

Slowly but surely Simmons' case is coming out into the MSM...he is the real deal as far as I am concerned...BP cannot be trusted, hell they even photoshopped pics that don't matter....and trust the Regime....ha!

While it's certain that much of what Matt says strains credulity (such as a massive oil lake or the BOP blown from the well that now lacks any casing) his estimates of the oil flow and severity were from the very beginning very close to where BP and the Gvt have finally admitted is (or was) reality.

When loud voices scream that I should ignore someone, I have a tendency to listen to the person being shouted down a little bit closer. The favorite technique of those who are trying to hide something is to shout down anyone who might be considered credible and who's speaking against the "official" line. It sometimes pays dividends to listen to those that the powers that be insist we shouldn't listen to.

He gets a little too extreme in his comments but it's hard to argue anything right now with the complete lack of information being provided. And any information being provided has a clear conflict of interest associated with it.

I too think the stock goes to $1. Haven't shorted it because that might be a slow process. At the very least, they are selling cash flowing assets to pay immediate expenses, never good for long-term value.

OT: I have a little crush on Lizzie. She had a tough time getting her hair done down in the Gulf (baseball caps) - it's a bit blonder now too.

The "fringe" or the one being described as crazy is sometimes right on target - in fact, usually but the reality of that truth is not realized until it has happened. Further - no one - I mean no one and I just went to a DERM meeting in Florida is testing any Florida waters for the Water/Oil/Dispersant mixture, which cannot be "seen" as it is clear.

Unfortunately, no one knows the real truth about any of this and we will most likely not know the "truth" until they have to realize it for themselves. It is disconcerting that a lot of people are focusing on money - money cannot - absolutely cannot - clean this mess up and this is a pretty nice body of water that is a necessary place for some decent life on this planet. Money has never cleaned up environmental disasters. Ever.

"When loud voices scream that I should ignore someone, I have a tendency to listen to the person being shouted down a little bit closer. The favorite technique of those who are trying to hide something is to shout down anyone who might be considered credible and who's speaking against the "official" line. It sometimes pays dividends to listen to those that the powers that be insist we shouldn't listen to."

Words to live by. Who's the perp that junked this? Show yourself. (sarcasm off)

Yep, my friend did that last weekend. And saw tar balls on his last day there. Someone isnt being very honest and is running their mouth. I'm not one to name names though. **cough cough Noah Vail cough**

Assuming it is true, of course the administration and BP would be in collusion.

WTF is the president going to say? The 4th largest state economy in the US, whose primary revenue generator is tourism, is going to be turned into the Forbidden Zone for a generation, and you really shouldn't eat any seafood, buy a condo or start a business there?

Can we just stop posting the Matt Simmons BS until he cites some of the sources for his info? His non-stop proclamations are worthless if he won't at least back some of them up. Over at TOD, they have posed multiple questions and refutations of what he is saying; it would go a long way towards establishing credibility if he would just address them. Besides, what does he have to lose if the actual truth gets out? I bet he would like to close out his shorts at 0 the sooner the better. Until he does this, I say he is full of shit.

I've listen to ever interview I've been made aware of. And anytime he's been asked how much he's short BP, he has consistently said 4,000 shares.

That's not a large short position for a man of his wealth. I don't know if he is now a billionaire but he said some years ago when he wrote his book that has has several tens of millions accumulated from his life's work and "some" of that was being invested in his newest venture.

Either way, 4,000 short BP is not a large position. If he were long, he would have $144,000 invested at $36 per share. Since he's short, he has less invested. And he was shorting since this started. I remember him saying he was short in an interview a few days after the rig sunk. So he's in the money by a large margin.

'A Pox on both their houses.' I am no BP fan, and I am sure they are scurrying like crazy to hide the truth of what is going on down their, but this Simmons guy is a fucking leech, a disaster profiteer who is shitting his pants because everyday the knews out of the GoM gets a little worse for his shorts.

Anyone with half a brain can see the following non-statement for what it is, pure BS: "What we don’t know anything about is the open hole which is caused by the drill bit when it tossed the blow-out preventer way out of the hole…"

Drill bit blown out of the well bore taking the 400-ton BOP with it. And he said this live!!!. Haahahahahahahahahahahahahhahahahaahhahahahahahahahahahahahahahaahahhha - drill bit hahahahahahahhahahaha 1$ per share hahahahahahhhhahahhaha. It's too much..

I've been reading Matt Simmons for years. What I've noticed about him is that he usually has excellent sources, but often gets the technical details wrong when trying to explain to others what his sources have told him. So naturally his opponents try to discredit him by focusing on details he got wrong.

He may also be a bit given to passion, probably because he has been trying for so long to explain limitations in future oil production to a bunch of non-listening idiots. (Enough to drive anyone crazy.) So, my assumption is that he's fundamentally right, but probably wrong in the details and also in degree. BP has probably essentially killed the Gulf of Mexico, and people will probably be getting sick from exposure to one thing or another down there, but we're probably not going to see the entire population of the Gulf coast falling over dead.

You mean like the technical detail of the BOP still standing upright even though he claims it was blown off the well bore?

My take is that each and every player in this game, is exactly that, a player in a game. BP and Fedgov covering up their incompetence? Absolutely.

Simmons talking his shorts? Well, there he is, making unsubstantiated, easily refutable claims, so take that for what it's worth. I'll only believe him if he donates his short profit to the clean-up effort. As for BP and Fedgov, that's easy. They aren't human, so I'll never believe those who speak for them.

Are you kidding ? Mathematicians have effed up the advancement of Science beyond all belief. Time to get back to the lab/reality and pay little heed to the equation jockeys and their phantasmagoric models. The map (or equation) is not the territory.

You can't get down to the oil beneath the sea without adhering to math principles. If you violate them, you won't get the oil. Your point may be correct, but my point is what is at issue in this discussion of the well gusher.

I want to like Matt Simmons. No one has done more to bring the topic of Peak Oil into public awareness and conversation than he has. And I would like to think that he's going to be successful with his offshore wind project in Maine. The problem I'm having is that when Simmons gets it wrong, it's almost always in a way that makes him sound like just another tin foil hat. It really undercuts what is otherwise a lot of fine research.

As far as the GOM being "dead," we probably won't know whether that's true or false for some time. The gulf is now a giant petri dish, and a vast experiment is underway. My guess is that it won't be about the beaches and the people, but about the bottom of the food chain, the little critters whose names we learned in high school biology but now have forgotten.

I'm really disgusted with Bloomberg for continuing to demonstrate Mr Simmons loss of mental capacity to the world. I have no doubt that many on this site will be supportive of "Matt Simmons energy industry expert" but you should keep in mind that you are buying into the notion that everything you have seen is faked. EVERYTHING. When the well is killed soon by pumping cement around and into the casing that is supporting the BOP and Cap Mr Simmons will claim that is fake as well as his super duper ultra dense oil hides down at the base of the ocean. I'm just staggered that BP could put together such a "show" and keep it a secret, all those boats and ROV's and people cleaning beaches, hell it's probably costing a trillion dollars just for the payoffs to keep them all quiet. Yes Mr Simmons believes all the oil that has been collected and has landed into Louisiana's marshes and Alabama's beaches is condensate that came out of the riser. You Simmons believers should go ahead and book your rooms for next year's convention, I'll bet that you can get even better bulk rates when you combine the truthers - birthers - and now gulfers all into one site (oh wait, it's probably all the same people................................)

I'm a finance guy so I have no way of validating or invalidating Mr. Simmons...but my father was chairman of WHOI for a time and has over 40 years experience in oceanography, as well as many contacts in the industry. He was a candidate to be chairman of the oceanographic division of the NSF and is a PhD Geochemist. Although he is not an expert on oil drilling technology, he says this guy must be taking bong hits of meth to make statements like this. His exact words were "this guy is crazy". I don't know Mr. Simmons or his agenda but I can tell you my father has none.

He invited the higher ups to the rig and they were 'partying' on the rig...

Now, I will not lie - I've seen all sorts of drugs and alcohol on the rigs. Offshore? They XRAY your freaking bags and pat you down before you get on the helicopter. In the north sea they always tell you about the guy who injected vodka into navel oranges and tried to bring that out... Not sure about the GOM where you can take a boat, but im sure the security is just as high.

So when matt simmons says they were 'partying'. I'm sure that meant coffee or tea. This guy is off his rocker.

I think most of what people believe from the MSM is fake. C'mon man wake up. Building 7, Saddam's WMDs, Swine Flu Propaganda, reassurances of economic growth, the New York Times and their Iran demagogy, lies, lies, and more lies. fake, fake, fake. we live in a fake plastic world of bullshit. sorry thats the way i see it. and no i dont have an iphone.

No, really all you have to do is keep the cameras away from a particular area. We've already seen that BP and the gov't are willing to have reporters arrested for looking in areas where they're not wanted.